The crisis in British Columbia鈥檚 forestry sector that saw more than 20 sawmills close or curtail production over the summer and put about 3,000 sawmill employees out of work, at least temporarily, is showing up in worsening trade figures for the province.
To the end of August, the cascading series of mill closures and production curtailments translated into an 11% drop in the volume of lumber exports, according to trade figures from sa国际传媒 Stats.
By value, the loss appears deeper with the $3.4 billion in export sales reported by the statistical agency representing a 25% decline from the same eight months of 2018, which is also weighing on sa国际传媒鈥檚 prospects for economic growth.
And the decline in forestry shipments was the biggest reason driving a 5.3% decline in sa国际传媒鈥檚 overall exports to the end of August. 鈥淵ou just can鈥檛 take sa国际传媒鈥檚 largest export industry and have it go through what it鈥檚 going through and not expect negative spinoff implications,鈥� said Ken Peacock, chief economist for the Business Council of sa国际传媒
鈥淚t just has to be.鈥�
The business council, an industry group representing sa国际传媒鈥檚 largest employers, reduced its expectations for economic growth next year to 1.8% from its earlier estimate of 2.2%, with the crisis in forestry one of two main factors for the decline.
鈥淚t鈥檚 also so widespread,鈥� Peacock said. 鈥淸Forestry] remains the foundation of so many regional economies and communities.鈥�
Peacock added that because the main factors driving the downturn are structural, sawmills are simply running short of available timber from Interior forests decimated by the mountain pine beetle, the effects are expected to last into subsequent forecasts.
The downturn becomes, in effect, a reversal of the economic multiplier effect, Peacock said. 鈥淸With] fewer jobs, unemployment, people aren鈥檛 spending as much so there is an impact in the retail space, auto sales, manufacturing activity,鈥� Peacock said.
And if forestry companies aren鈥檛 profitable, he said, they are less likely to invest in capital upgrades of their operations.
This week, lumber manufacturers West Fraser Timber Co. Ltd. and Canfor Corp. reported financial losses in the last fiscal quarter.
West Fraser posted a $15 million net loss on almost $1.2 billion in sales for the three months ending September 30, compared with a $275 million profit for the same period in 2018.
Canfor reported a $44 million loss on $1.1 billion in revenue for the same period compared with net income of $157 million on $1.3 billion in sales during the same months of 2018.
